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CA Final · Advanced Auditing, Assurance and Professional Ethics · Completion and Review

CA Meena is auditing Sagar Foods Ltd. After the financial statements were issued with her report, management finds a fact that existed at the balance sheet date and decides to amend the financial statements. Under SA 560, and unless the circumstances in paragraph 12 apply, what must she do?

She must perform the necessary procedures on the amendment, review management's steps to inform those who received the earlier statements, extend the subsequent event procedures to the new report date, and issue a new report dated no earlier than approval of the amended financial statements.

  1. ACarry out audit procedures on the amendment only and keep the original report valid without any new report
  2. BCarry out necessary procedures on the amendment, review the steps management took to inform recipients of the earlier financial statements, extend the subsequent event procedures to the date of the new report, and give a new reportCorrect
  3. CWithdraw from the engagement, because amendment after issue is not permitted
  4. DGive a new report dated on or before the original report date, so users are not confused

Explanation

SA 560 para 15 requires procedures on the amendment, a review of management's steps to inform recipients of the issued statements, extension of the paragraph 6 and 7 procedures to the new report date, and a new report. That new report date is no earlier than the date of approval of the amended statements. Option A omits the new report and the extension, and option D breaches the dating rule.

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